Let’s say you are going to buy a property or already own a property, and you're interested in getting some work done on it. This could be for a new kitchen, installing a new roof, adding a deck, or any other changes that you may want. Well, the old saying about how remodels usually cost twice as much and take three times as long as you anticipate is not really true. It usually costs three times as much and takes four times as long! But to help you through it all, let’s discuss a few things that can be done to lower your risk on a remodel.
Here’s the biggest risk you assume on doing a remodel and/or comparing bids for work: The owner (that’s you) adding on or modifying the scope of the work. In other words, it’s the “let’s go ahead and take out that extra wall” work order after you’ve signed the rehab contract that will run up the prices. This is because many times, it just costs the general contractor a lot more to do those changes, and/or there’s no competition at that point, so he can just quote whatever price he wants and you have little choice but to accept it if you want the changes.
The way to mitigate this and compare identical bids side by side is to take the time upfront to fully determine the scope of the work you want done so you don’t have change orders during your renovation. Have different contractors, friends, real estate professionals, and designers come in to look at your property and make suggestions. Plus, you should also tour other properties like new homes and similar neighborhood homes to see what changes they’ve made or designs that you like so that your final written request for bids fully reflects all the work you want done on the property. Taking the time upfront to do this will save you a lot of money, stress, and hassle once you dig into the renovations process. With that very detailed and exact scope of work in writing, you’ll get the most accurate cost bids, reducing your chances of running into last-minute changes that can run up your final bill. Now, there are some other things you can do too that will help further reduce your risk.
Make sure to get a lot of references for the contractor you select, and then call those references and ask a lot of questions. You might even want to go see some of the work they’ve done in person to judge the quality of it up close and ensure that it was a true reference and not a sham. You can also check with the Better Business Bureau and the state board that licenses contractors to make sure they are in good standing.
In addition, obtain a copy of their insurance, bonding, and licensing documents – and maybe even call that vendor or agency to confirm they are correct and in force. The bigger the dollar amount of remodel, the more due diligence you want to do on your selected contractor. If you don’t, you might find out the hard way that not everything was in order as it seemed.
Also, you should generally have the general contractor be responsible for managing the entire job. If you piece meal items and something goes wrong, everyone will be pointing their fingers at others, so be cautious. And if it’s a big job, you may want to work out a deal where you pay subcontractors directly or write the checks to both the general contractors and the subcontractor (both parties on each single check). This is because if a sub does work on your property, but doesn’t get paid by the general contractor, you may still owe the subcontractor for the work, so be extra careful on big jobs.
Most people only do one or two remodels in life, so they aren’t very good at contracting and protecting themselves against a very skilled contractor negotiator. But with a little prudence with the advice above, plus talking to your friends, acquaintances, and others who’ve done remodels, will go a long way towards your getting fair comparisons on bids and having a high-quality job done at your property.
For more information about insuring your newly remodeled home or rental, contact the insurance experts at Insurance Planning Service at 800-220-5582 or use our online contact form, today!
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